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Restaurant industry enters 5th consecutive year of sales growth

2014 will mark the fifth consecutive year of restaurant industry sales growth despite a continued challenging economic landscape, according to the National Restaurant Association's2014 Restaurant Industry Forecast released today. Industry sales are projected to exceed $683 billion in 2014, up 3.6 percent from 2013's sales volume of $659.3 billion.

2014 also will mark the 15th straight year in which restaurant industry employment growth will outpace overall employment growth. The industry will continue to be the nation's second-largest private employer with 990,000 restaurants employing 13.5 million individuals, or about 10 percent of the total U.S. workforce.

"As our nation continues its road to recovery, the restaurant industry will remain a key driver of economic growth and a leading jobs creator," said Dawn Sweeney, president and CEO of the National Restaurant Association. "Restaurants touch every community across the U.S., and 2014 will be a year of growth and innovation as the industry focuses on inspired new ways to meet consumer demand while providing valuable careers to millions of Americans."

"Despite facing a range of challenges, America's restaurants are showing continued resiliency and innovation," said Hudson Riehle, senior vice president, Research & Knowledge for the National Restaurant Association. "As the industry enters its fifth straight year of real sales growth, operators are feeding consumer appetites with new technology, customer loyalty efforts, and evolving menu options. Consumers currently have a historically high pent-up demand for restaurant services, which is likely to translate into a business boost as the economy continues to improve – and our nation's foodservice operators are rising to the challenge."

Workforce Outlook
The NRA expects eating-and-drinking places to add jobs at a solid 2.8 percent rate in 2014, a full percentage point above the projected 1.8 percent gain in total U.S. employment.

The restaurant workforce grew at a robust rate in 2013, keeping the industry among the economy's leaders in job creation. Eating and drinking places added jobs at a strong 3.3 percent rate in 2013 outpacing total US employment which grew at 1.6 percent.

While every state is expected to see their restaurant industry workforce expand during the next decade, states in the southern and western regions of the United States will continue to lead the way in 2014. Arizona and Texas are projected to set the pace with restaurant-and-foodservice job growth above 15 percent between 2013 and 2023. Florida (15.0 percent), Nevada (14.7 percent) and Georgia (14.4 percent) are also expected see their restaurant employment base expand at rates well above the national average during the next 10 years.

Challenges and Opportunities
While the restaurant industry is expected to grow in 2014, operators will continue to face a range of challenges. The top challenges cited by restaurateurs include food costs, labor costs, and the economy.

After increasing steadily in the last four years, wholesale food costs will continue to be elevated through 2014, putting significant pressure on restaurants' bottom lines as about one-third of sales in a restaurant goes to food and beverage purchases.

Virtually all operators across the industry (limited-service and tableservice restaurants) saw labor costs as a primary challenge in 2013, and that will continue in 2014. Challenges with ACA implementation and minimum wage increases across the country have made a significant impact on restaurant bottom lines, as typically one-third of restaurant sales is spent on labor.

One of the primary reasons that restaurant-industry sales growth hasn't fully taken off during the economic recovery is that consumers for the most part haven't broken out of their recession rut. When asked in December 2013 to rate the current state of their own personal finances, nearly six out of 10 adults described their finances as either fair or poor and among those adults, nearly one-half said they are very concerned about the economy and have cut back significantly on spending.

Despite spending cutbacks, consumers have substantial pent-up demand for restaurant services with two out of five consumers saying they are not using restaurant as often as they would like; with improving economic conditions, that demand is likely to turn into sales.

Consumer Trends
Technology innovation continues to play a vital role within the industry. Nearly one-fifth of consumers say technology options are an important feature that factors into their decision when choosing a fullservice restaurant; 24 percent of 18- to 34-year-olds say they consider a restaurant's technology options when selecting where to go, compared to 11 percent of individuals age 65 and over.

Similarly, more than one-fifth of consumers say technology options factor into their decisions when choosing a limited-service restaurant; 33 percent of 18- to 34-year-olds, compared to 7 percent of those 65-plus.

To keep up with the evolution of consumer palates, restaurant operators across segments added new food and beverage menu options throughout 2013 and will continue to do so in 2014.

Local sourcing and nutritious options (such as healthful kids' meals, gluten-free) continue to be the top trends throughout the industry.

Eight out of 10 of consumers say restaurants offer more healthy menu options now compared to two years ago, and seven out of 10 say they are more likely to visit a restaurant that offers healthy options.

Environmental sustainability is a long-term trend among operators and consumers. Nearly three out of five consumers say they are likely to make a restaurant choice based on its eco-friendly practices.